The US Federal Trade Commission and 17 states have sued Amazon claiming that they exploited sellers who use their marketplace, with questions now being asked as to whether there will be fallout in Australia where Amazon has grown their online business and their relationship with distributors who use their marketplace to get both local and global sales.

The FTC claims that the big online retailer illegally uses monopoly power to overcharge consumers, hobble competitors and exploit sellers on a regular basis.

The landmark lawsuit filed last night accused the $1.3tn ecommerce giant of increasing fees to sellers on its marketplace so that it extracts nearly half of every dollar of revenue made by many sellers.

Some are claiming that FTC Chair 34 year old Lina Khan has had a “manic obsession” to go after Amazon.

Before being appointed to head the commission by President Joe Biden, Khan rose to prominence with a 2017 academic paper calling for the break-up of Amazon.

Described as being a “tyrant’ by former staff who Amazon happen to be hiring ahead of the trial Khan has already lost one major fight with a tech giant when a judge overruled an FTC decision in the Microsoft Activision case.

Currently Amazon is several staffers from the Federal Trade Commission as it gears up for what has been described as an epic antitrust battle with the US agency.

“If you’re preparing for war, hiring people who used to work for the opposing army is a good way to gather intelligence,” Jeff Hauser, founder of the Revolving Door Project, told On The Money in the USA last night as news of the FTC case unfolded.

Some of the officials Amazon poached include former FTC attorney Brian Huseman who manages Amazon’s policy shop, former FTC attorney in the Competition Bureau Amy Posner who is senior corporate counsel, and former FTC attorney Sean Pugh who is now a senior manager in public policy.

Amazon’s hiring spree has been made easier by FTC Chair Lina Khan after there was a mass exodus of disgruntled staffers who allege she is a “tyrant” with an “abusive” management style.

“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” Khan said in a statement.

David Zapolsky, Amazon’s senior vice-president of global public policy and general counsel, said the lawsuit “makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition”.

“The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court,” he said.

The heavily redacted complaint detailed ways in which it said Amazon built up and maintained both an “online superstore” attracting hundreds of millions of shoppers, and an “online marketplace” where other vendors could sell their products, creating a behemoth of goods and data that would-be rivals could not match.

“According to [Jeff] Bezos”, Amazon’s founder, “‘build[ing] an important and lasting company… . in ecommerce’ simply ‘isn’t going to work in small volumes’”, the complaint said.

To maintain this alleged monopoly, the FTC said Amazon used a “sophisticated surveillance network of web crawlers” that monitored whether Amazon sellers were offering their products cheaper on other sites, and punished sellers who did so.

According to the complaint, an internal Amazon study had acknowledged that sellers lived “in constant fear” of such tactics.

The lawsuit also alluded to an Amazon pricing system internally codenamed “Project Nessie”, which the FTC said had boosted the company’s profits. Further details of Project Nessie were redacted.

The regulator also alleged that Amazon had made “extensive efforts” to frustrate the regulator’s investigation and “hide information about its internal operations”.